Ministers ditched a green bus plan expected to protect Scottish jobs at a failing bus giant kept afloat with public cash — and instead backed a £45 million scheme that sent nearly half the work to China, The Herald can reveal.
The decision has sparked fury after it emerged an alternative route could have delivered significantly more work to struggling manufacturer Alexander Dennis (ADL) at a critical time for its workforce which is now faced with major job losses.
Instead, ministers opted for what they described as the “fastest and most certain route” — a competitive funding model that left contracts up for grabs and saw nearly half of the contracts go to Chinese firm Yutong.
Official documents show ministers, including the First Minister, were warned the chosen scheme offered “no guarantee of orders” for ADL, even as the company pleaded for new work to protect more than 400 jobs in Falkirk and Larbert.
The warning came despite the firm already being supported with millions of pounds in public funding, including a £4.1 million furlough scheme designed to keep workers in place while new contracts were secured. In the immediate aftermath of the scheme awards the company sought to axe a quarter of the workforce.
But The Herald has learned ministers were also kept in the loop on an alternative approach — directing funding through bus fleet manager Rock Road, which has a close working relationship with ADL.
Insiders believe that the ADL could have delivered well over half of the 334 buses being funded — providing a crucial pipeline of work when the company needed it and decisions over job losses would have been expected to be different.
Instead, the ScotZEB3 awards saw ADL secure fewer than a third of the contracts.
The Scottish Government's furlough intervention followed a crisis last year when ADL warned it would close its Scottish sites and move scheme designed to support workers that were not gainfully employed while new orders were secured.
Government papers described that support as providing “a platform to secure the highly skilled manufacturing jobs we need for Scotland’s transition to net zero, during the present gap in orders".
The decisions on ScotZEB3 are under even further scrutiny following confirmation that ADL decided that 115 jobs are at risk in Scotland. As part of re-organisation it is to close its Falkirk plant.
But The Herald has learnt that ministers, including the First Minister were kept in the loop over an alternative to ScotZEB3 which would have provided greater support for ADL and was rejected. That would have involved ploughing money through zero emissions bus fleet manager Rock Road - who have a close working relationship with ADL. Under ScotZEB3 ADL were getting 90% of the work awarded to Rock Road.
Insiders expected that more that half of the orders would have gone to EDL.
But the route was turned down in favour of the ScotZEB3 process which officials told ministers provided "the fastest and most certain route for ministers to support new zero emission bus orders into the market".
The briefing only said that Rock Road approach considered “would not be within the parameters" of the previous scheme meaning it fell outside the rules of the procurement option ministers had previously chosen to use.
The results of ScotZeb3 saw ADL get the work for less than a third (109) of the buses being funded - with the majority going to China.
But it is understood within ADL there was concern that the work was not as immediate - and was being pushed back to 2027, when the firm needed more urgent orders. And only 14 of the 109 buses were suitable to be built in Scotland estimated to be just a month's work.
Critics say that the Scottish Government has not done enough to save bus company jobs — drawing parallels with how it intervened in other strategically important businesses when they ran into trouble.
That includes Ferguson Marine, which received grant funding before being nationalised during the ferry fiasco, when the yard ran into severe financial difficulties amid spiralling costs and years-long delays to the delivery of two major CalMac ferries.
One staff representative told The Herald that it was "wrong" to have dismissed alternative routes like that which was rejected saying: "This alternative was game-changing for us and i felt would protect all the jobs here. The Scottish Government has looked to provide work to support Ferguson Marine to support shipbuilding and yet the manufacturing of buses here in Scotland is being neglected."
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The developments have intensified questions over whether public funding has been used in a way that effectively supports domestic manufacturing — or whether the structure of the scheme limits ministers’ ability to direct work to Scottish firms.
The same documents show ministers were warned bus orders were “not coming to market as quickly as expected”, raising concerns about whether manufacturers would secure the pipeline of contracts needed to sustain production.
Despite those warnings, ministers concluded that launching a fresh competitive round of funding was the “fastest and most certain route” to support bus orders while offering "no guarantee of orders for ADL (or any other bus manufacturer)” — laying bare the risks at the heart of the policy.
The furlough scheme was explicitly aimed at protecting jobs and preserving manufacturing capability, with government documents stating it was intended to “preserve the skills base and protect jobs in bus manufacturing in Scotland”.
At the same time, ministers were pressing ahead with ScotZEB3, a competitive process, allowing operators to bid for funding and choose their suppliers.
Video: Deputy First Minister Kate Forbes in discussing Alexander Dennis's plight told MSPs on November 18 that ministers were doing "everything within our powers and within the law to ensure that we support Scottish industry"
The ScotZEB programme was designed to accelerate the shift to cleaner buses and encourage investment in new technologies. Government documents state that it aims to support “inward investment and growth in relevant supply chains with associated employment, economic and social benefits”.
The briefing to ministers on November 17, confirmed: "Whilst ADL might stand to gain orders through this process, there are no guarantees."
In a government briefing Q and A querying whether the past ScotZeb funding was about supporting ADL, it said: "ScotZEB is about reducing transport emissions – but it is also about supporting jobs across the bus sector – whether that’s mechanics working on buses for operators, bus manufacturers, or companies which are part of the wider supply chain across the entire bus sector.
"Any commercial arrangements between a ScotZEB applicant and its suppliers are matters for those parties and will normally be commercially confidential.
"Ministers are clear that they wish to support Scottish bus and coach manufacturing where they are able to. The Scottish Government cannot however guarantee that any specific supplier will receive orders."
Trade unions have warned that the structure of public funding is undermining Scottish industry by allowing contracts to flow overseas.
Robert Deavy, a senior organiser in manufacturing at GMB Scotland, said: “How many jobs must be lost and factories closed in Scotland before our governments stop sending contracts around the world?” he said.
“Every bus from China, ferry from Turkey and tugboat from Vietnam is degrading our industrial capability, costing our country good jobs and apprenticeships, and hollowing out communities.
“We are losing crucial industrial skills and supply chains and that, in an increasingly uncertain world, is economic madness and a senseless risk.”
The Scottish Government has maintained that its intervention helped avert more immediate job losses and provided a platform for the company to secure future work. Ministers previously emphasised that the furlough scheme was designed as a temporary measure, dependent on the company securing sufficient orders to sustain operations.
The Herald previously revealed that ADL has benefited from tens of millions of pounds in public funding over recent years, well beyond the £4.1m furlough scheme designed to keep workers in place during the latest crisis. Government records show the company received around £58m in subsidy support for green buses since 2020, alongside roughly £30m in research and development grants through Scottish Enterprise.
That funding continued even as concerns were being raised about the company’s long-term commitment to Scotland. Former Alba Party leader and ex-SNP cabinet secretary Kenny MacAskill said: "Furlough could only have worked if the UK and Scottish Governments had taken the necessary action.
"There's no guarantee that even what remains is viable nor that continued cheap Chinese imports won't kill what is left.
"It's a tragedy that is so needless. The only winner will be China. "
For ADL, the immediate issue is survival and securing a pipeline of work.
And for ministers, the challenge is explaining how a strategy designed to protect jobs has coincided with significant job losses.
And for workers in Falkirk and Larbert, the reality is far more immediate — with livelihoods now uncertain despite months of promises that help was on the way.
Transport Scotland said the zero emission buses supported through the scheme will operate in Scotland, and the scheme is designed to comply fully with the Subsidy Control Act 2022, including Section 17, which they said "prohibits local content requirements as a condition of subsidy".
A Scottish Government spokesperson said: “The Scottish Government and our partners remain steadfast in our commitment to working with Alexander Dennis and NFI Group to retain Scottish bus manufacturing capacity. This includes grant funding for a furlough package of up to £4.1 million which is available as a bridge to a sustainable future for the company in Scotland.
“Officials and Scottish Enterprise remain in regular contact with the business and with workforce representatives. We stand ready to provide support where appropriate to Alexander Dennis and continue to discuss options across a range of areas to protect these skilled jobs and bus manufacturing."
